Carbon scheme a free hit for importers: Ford

FORD Australia has told the federal government the combined effect of a carbon emissions trading scheme and the scheduled drop in tariffs in 2010 would give exporting countries such as Thailand a major boost in competitiveness against domestic car-makers.

The cost impost of the emissions trading scheme (ETS) could amount to “many millions of dollars” a year, Ford’s government liaison manager Elly Haug said in a written submission to the senate select committee on climate change.

Ford’s submission said Ford would be further disadvantaged under the proposed ETS by the extra cost passed on by transport companies that delivered locally made cars around the country.

Importers are able to land their vehicles at every major port, avoiding much of the extra transport cost, Ford claimed.

Despite these concerns, the company stressed that it supported the proposed ETS and, in particular, it applauded the inclusion of the land transport industry. Land transport has been omitted from some overseas schemes, including in Europe.

Left: Ford Australia production.

The Federal Chamber of Industries is also concerned about the possible implications of an ETS, not least because the car industry has not been picked up as a trade-exposed industry under the ETS arrangements.

“One of the issues is that they are a trade exposed industry, although they are not picked up in the emissions intensive trade exposed industry arrangements that have been proposed under the scheme,” the chamber’s chief executive Andrew McKellar said yesterday.

Under these arrangements, certain energy intensive industries such as smelting will be granted free carbon trading units so that they do not become uncompetitive with imported products that do not carry an ETS impost.

Mr McKellar said the Government had decided to gradually introduce the impact of higher costs on petrol by excluding petrol for the first three years and then imposing the ETS costs incrementally.

Ford said the inclusion of land transport in the scheme was fundamental to the integrity of the ETS and would, over time, provide an important price signal to consumers on the need for behavioral change.

The submission says Ford prefers that any carbon reduction scheme be a market-based system. But it was worried about the effect on its competitiveness of having to carry the extra cost burden.

“It is difficult to precisely quantify the impact, but it could well be in the order of many millions of dollars via increased energy costs covering direct and indirect emissions from company and supplier facilities,” Ford said.

“This will affect the industry’s competitiveness, particularly versus imported vehicles from economies like Thailand where similar schemes do not exist.” Australia has a free trade agreement with Thailand, eliminated automotive tariffs, at least for Thai vehicles coming to Australia. In the three months to March, Thai vehicles took 16.4 per cent of the Australian market (up from 15.1 per cent a year ago), while Thai purchases of Australian vehicles were negligible.

“The increased presence of such imported vehicles in the Australian marketplace means there will be extremely limited opportunity for domestic manufacturers to offset these increased costs with higher prices, particularly as the proposed introduction of the scheme in 2010 will coincide with a drop in the passenger car import tariff from 10 per cent to five per cent.”

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